Exercise 7-8 (Algo) Computing and Interpreting Activity Rates (L07-3) The operations vice president of Security Home Bank has been interested in investigating the efficiency of the bank's operations. She has been particularly concerned about the costs of handling routine transactions at the bank and would like to compare these costat the bank's various branches. If the branches with the most efficient operations can be identified their methods can be studied and then replicated elsewhere. While the bank maintains meticulous records of wages and other costs, there has been no attempt thus far to show how those costs are related to the various services provided by the bank. The operations vice president has asked your help in conducting an activity based costing study of bank operations. In particular, she would go to know the cost of opening an account, the cost of processing deposits and withdrawals, and the cost of processing other customer transactions. The Westfield branch of Security Home Bank has submitted the following cost data for last year: Toller wage Assistant branch manager salary Branch manager salary Total $ 150,000 68,000 90.000 $ 300,000 Virtually all other costs of the branch-rent, depreciation, utilities, and so on-are organization-sustaining costs that cannot be meaningfully assigned to individual customer transactions such as depositing checks. In addition to the cost data above, the employees of the Westfield branch have been interviewed concerning how their time was distributed last year across the activities included in the activity based costing study. The results of those interviews appear below Distribution of Resource Consumption Acrow Ativities Processing Processing other Opening Deposits and customer Other Account withdrawal Transactions Metivities Totale Teller vagen 45 738 200 1000 Assistant branch manager salary 145 101 245 440 1008 40 Branch manager salary 250 00 710 1001 format concerning the transactions of the I don to the cost aalb above, the employees of the Westfield branch have been interviewed concerning how the time was distributed last year across the activities included in the activity-based costing study. The results of those interviews appear below. Distribution of our Consumption ross Motivi in Processing Processing Other Opening Deposits and Customer Other Accounts withdrawala Transaction Activities totale Teller wagen 46 200 31 1008 Asostant branch manager malary 181 441 1001 Branch manager salary 48 ON 250 710 1001 The manager of the Westfield branch of Security Home Bank has provided the following data concerning the transactions of the branch during the past year: 730 145 241 Activity Total Mority at the Westfield Branch Opening accounts 245 new accounts opened Processing deposits and withdravate 51,000 deposits and withdrawals processed Processing other customer transactions 1,050 other customer transaction processed Required: 1. Compute the activity rates for the activity based costing system (Round your answers to 2 decimal places.) Activity Cost Pool Opening accounts Processing deposits and withdrawals Processing other customer transactions Activity Rate per account opened per deposit or withdrawal per other customer transaction
